Comparison of performance indicators between companies

There is no company in the world that does not want to know how its competitors are performing. This practice of comparing companies, which has long been called benchmarking, is a very valid way for companies to check whether their performance is good or bad in relation to other reference points, other than themselves.

If the company only compares itself with itself, it will have a myopic view of the market, not seeing opportunities that other companies have already managed to obtain.

In the simple example below, if the company represented by the color red just looks at its performance history, it will understand that it is improving more and more, and that its performance is very good. But if she has information on the performance of other companies, she will know that her performance fell short of what it could have been.

Source: ILOS

Understanding that benchmarking is important is easy. The hardest part, however, is getting it to work.

There are two main barriers to this operationalization. The first major barrier is getting companies to agree to provide their data for comparison. Most companies want to know the data of other companies, but do not want to show their own data, claiming confidentiality.

The second major difficulty is the standardization of information between companies, which is essential to make it possible to compare, on an equivalent basis, the operations of different companies.

In his last post, the Bernardo Falcon commented on the difficulties of measuring logistics performance indicators, and the Thatiana Nomi had also commented on common mistakes in creating indicators. If the correct measurement of internal indicators in the same company is no longer very simple, comparisons between different companies become even more complex.

But not everything is difficult. For example, so that there is no breach of confidentiality, the ideal solution is to have an independent external agent to carry out the comparisons, who is not one of the companies being compared and who has no direct interest in the benchmarking results. It can be an association, institute, consultancy, or even an automated tool created especially for this. This exemption is important so that it is possible to compare data between companies without necessarily identifying the name of each company providing the data.

Another piece of good news, which few companies have realized, is that benchmarking doesn't have to be done exclusively with competitors. It is even highly recommended to carry out comparisons between companies from different segments. This allows an “out of the box” view, in addition to the exchange of information becoming much easier and open.

As for the standardization of the indicators, it is essential that the metrics be established before the start of the benchmarking, clearly specifying the calculation method for each indicator. Participating companies need to be committed to making the calculations according to what was defined for comparison, and understand that they will not always use the same indicators that are regularly monitored on a daily basis. For example, the company can internally monitor the product availability rate, defined as the total units delivered over the total units ordered by the customer, but benchmarking can define that the availability comparison will be calculated by the percentage of complete orders delivered without no fault.

A facility for companies is that some benchmarkings are already standardized and ready for use. The ILOS Institute, for example, provides several forms of benchmarking, including the road freight price comparisons between shippers, technical visits to facilities of international companies e comparative field research between companies from different segments.

For companies that don't already perform regular benchmarking, it's worth starting!